Tech: Titomic in the money with $25m sales contract
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3D additive manufacturing company Titomic (ASX:TTT) just got a timely boost to its top-line revenue numbers.
The company said it entered into a binding agreement for the sale of two Titomic Kinetic Fusion (TKF) Metal AM Systems.
The Fusion system, co-developed with the CSIRO, deploys a “cold spray” process to spray metal powder at high velocity.
Titomic will sell the two units to Composite Technology — the Australian division of an unnamed global defence manufacturer.
The sale is the result of a two-year R&D phase carried out jointly by both companies. During that time, Composite Technology tested the quality assurance and design specifications of the Fusion technology to ensure it met the requirements for serving the defence sector.
And having been approved, the deal came with a hefty price tag of $25.5m.
Based on Commsec data, shares in Titomic appeared to remain in a trading halt during morning trade, where they have been since Monday pending today’s announcement.
However, futures pricing on Commsec showed the stock was expected to rise by more than 25 per cent upon the recommencement of trade.
The deal marks a strong development for Titomic, which attracted plenty of attention in the wake of its 2017 listing.
However, the share price struggled for traction last year as investors demanded evidence that it could turn the promise of its 3D printing technology into actual revenue streams.
As part of the extended partnership between the two parties in the transaction, the buyer (Composite Technology) is also expected to enter into a Joint Cooperation Agreement (JCA) with Titomic, which will see it granted 7.5 million Titomic options.
In accordance with the JCA, the two sides have agreed to “jointly develop new material technology and manufacturing process IP, exclusively utilising Titomic’s Kinetic Fusion manufacturing systems for defence products”.
Titomic said the sale also acted as an official certification of its technology. It expects the deal will act as a catalyst to “open up further large revenue opportunities” via more partnerships with established companies in high-margin industries such as defence.
Composite Technology will be granted an additional 7.5m Titomic options for providing certification around the quality assurance requirements of the Fusion technology.
Titomic CEO Jeff Lang said the deal was a “significant milestone” for the company.
“Signing this sales contract further validates the exceptional work the staff at Titomic have achieved in creating the world’s largest and fastest metal additive manufacturing TKF systems,” he said.
Following the investment by iSignthis (ASX:ISX) in secondary stock exchange NSX (ASX:NSX) last week, the current chairman of iSignthis, Tim Hart, has joined the exchange’s board. Hart has chaired iSignthis — which remains in suspension from the ASX — since 2015.